Sivaraj Associates

Friday, October 24, 2014

The Division Bench of the Kerala High Court vide judgment dated 21/10/2014 has dismissed a batch of Writ Appeals filed by the Central Government challenging the order dated 3/7/2013 passed by the Single Bench of the Kerala High Court wherein the levy of service tax on AC Bar Restaurant was held to be unconstitutional.
Kerala Classified Hotels and Resorts Association and similar other associations/ bar hotels had filed the writ petitions challenging the levy of service tax on AC Bar Restaurants. The Single Bench allowed the writ petitions declaring the aforesaid levy as unconstitutional.The Division Bench of the Kerala High Court disagreed with the decision of the Bombay High Court and upheld the decision of the Single Bench.

Wednesday, December 18, 2013

The legality and validity of section 234 E of the Income Tax Act, 1961 inserted
by the Finance Act, 2012 making a person liable to pay, by way of fee, a sum of Rs
200/-for each day's delay in filing the statement of Tax Deducted at Source
(TDS) or Tax Collected at Source (TCS) is challenged in the High Court of Kerala. The levy in the nature of 'fee' has been challenged as illegal, arbitrary, unreasonable, invalid and unconstitutional, in a writ petition filed by a Lower Primary School in Kannur.

The Honourable High Court has admitted the writ petition and has stayed all the proceedings initiated against the petitionerunder section 234E of the Income Tax Act for a period of two months. The standing counsel for the Income Tax department took notice for all the respondents in the writ petition.

The copy of the interim order passed by the Honourable High Court in the above matter is given below:

Vide order dated 14-2-2014, the Honourable Court extended the interim order by further 6 weeks. Thereafter on 27th March 2014, the stay has been further extended by 2 months. The copy of the interim order dated 27th March 2014 is given below:

Wednesday, July 03, 2013

By the Finance Act, 2011 amendment has been made to the Section 65 Clause 105 of Chapter V of the Finance Act whereby the service provided or to be provided to any person by (1) restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises and (2) hotel, inn, guest house, club or camp-site, by whatever name called, in relation to providing of accommodation for a continuous period of less than three months; are brought under the definition of taxable service.

The constitutional validity of the aforesaid amendment was challenged before the Honourable High Court of Kerala by the Kerala Classified Hotels and Resorts Association vide W P (C) 14045 of 2011 and other Hotels and Restaurants contenting that the aforesaid levy by the Centre transgress upon the subject matter falling under State List -Entry 54 and Entry 62 respectively of the List II of the Seventh Schedule of the Constitution and therefore beyond the legislative competence of the Parliament.The Honourable Court at the time of admission had granted stay against any coercive steps for recovery of service tax or against any proceedings for imposing penalty for a period of 2 months, which was later extended until further orders.

The matter was finally heard by the Honourable High Court and has pronounced the judgment on 3-7-2013 allowing the writ petitions on the following lines:

"Writ Petitions are allowed as follows:

i)It is declared that Sub Clause (zzzzv) and (zzzzw) to clause 105 of section 65 of the Finance Act 1994 as amended by the Finance Act 2011 is beyond the legislative competence of the parliament as the clauses are covered by Entry 54 and Entry 62 respectively of List II of Seventh Schedule.

ii)That if any payments have been made by the petitioners on the basis of the impugned clauses, they are entitled to seek refund of the same."

Friday, March 16, 2012

Recently the Divisional Security Commissioner of Railway Protection Force, Thiruvananthapuram has reported that Southern Railways has launched a drive in Kerala to check drunken passengers in the railway premises and in the trains by using Breath Analysers. As part of the said drive, any persons found to have consumed liqour is being booked invoking section 145 (a) of the Railways Act, 1989.

As per section 145 (a) of the Act, any person found "in a state of intoxication" in any part of railway or railway carriage is said to have committed the offence. Therefore it is very clear that mere consumption of alcohol by a person will not attract the above provision. Only when a person is found to be " in a state of intoxication" the offence is attracted.

Neither the definition of the expression "State of Intoxication" nor the machinery or the mechanism to ascertain the "state of intoxication" referred to in section 145 (a) is provided under the Act or the Rules made there under. The said provision enables the 'Railway servant' or the 'officer authorised' to take action according to their discretion that too in an illegal and arbitrary manner. Without there being sufficient procedural safeguards, no doubt, the said provision will work arbitrarily.

The present drive of the RPF in Kerala to check drunken passenger by using Breath Analyser is the best example of such an arbitrary exercise. The Breath Analyser is not a method prescribed under the Act or Rules to ascertain " the state of Intoxication". Quantity consumed is not the test to ascertain the same. This has resulted in a situation whereby any person found to have consumed liqour/smells of alcohol is booked for the alleged commission of offence under section 145 (a), which is a cognizable offence as per section 179 of the Act. This is not what is contemplated under the above provision. The consumption of liquor from permitted place is legal. On account of the above illegal and arbitrary action of the RPF, a person without fear or apprehension of getting booked under section 145 (a) for having consumed liqour, is not able to either enter the railway premises or in the trains. The free movement of a person according to his choice is affected and there is every likelihood of loosing the dignity and reputation in front of the other passengers or public.

That being the position, aggrieved by the aforesaid action, Mr. K.N Shastry from Cochin has filed a writ petition before the High Court of Kerala challenging the validity of section 145 (a) and its enforcement by the railway authorities under the Act as arbitrary, unguided, unreasonable, discriminatory and violative of Article 14, 19 and 21 of the Constitution of India. The Honourable Court has admitted the writ petition and issued notice to the respondents including the Railways.

Thursday, June 16, 2011

By the Finance Act, 2011 amendment has been made to the Section 65 Clause 105 of Chapter V of the Finance Act whereby the service provided or to be provided to any person by (1) restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises and (2) hotel, inn, guest house, club or camp-site, by whatever name called, in relation to providing of accommodation for a continuous period of less than three months; are brought under the definition of taxable service.The constitutional validity of the aforesaid amendment is challenged before the Honourable High Court of Kerala by various Hotels and Restaurants. The Honourable High Court has admitted the writ petition and has issued urgent notice to the respondents therein. The Honourable Court has further granted stay against any coercive steps for recovery of service tax or agaisnt any proceedings for imposing penalty for a period of 2 months.